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RESOLUTION 93-20774 • r ` RESOLUTION 93-20774 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA AUTHORIZING 1) THE ADMINISTRATION TO NEGOTIATE WITH GOLD COAST CABLEVISION RENEWAL AND MODIFICATIONS OF ITS CABLE TELEVISION FRANCHISE AGREEMENTS; 2) TO AUTHORIZE THE ADMINISTRATION TO CERTIFY TO THE FEDERAL COMMUNICATIONS COMMISSION FOR CABLE RATE REGULATION AUTHORITY; 3) TO AUTHORIZE THE ADMINISTRATION TO RETAIN LEIBOWITZ & SPENCER AS OUTSII;E COUNSEL TO REPRESENT THE CITY IN CABLE TELEVISION MATTER`,; 4) TO AUTHORIZE THE ADMINISTRATION TO HIRE AN OUTSIDE ENGINEERING FIRM FOR A TECHNICAL AUDIT OF THE GOLD COAST CABLE TELEVISION SYSTEM; 5) TO AUTHORIZE THE ADMINISTRATION TO CONDUCT A FINANCIAL AUDIT OF GOLD COAST CABLEVISION; AND 6) TO AUTHORIZE THE ADMINISTRATION TO CONSIDER THE POSSIBILITY OF MUNICIPAL OWNERSHIP OF CABLE TELEVISION AND TO REPORT BACK TO THE COMMISSION WITH A REPORT AND RECOMMENDATIONS. WHEREAS, the rules and regulations of the Cable Television Consumer Protection and Competition Act of 1992 create an environment wherein the ultimate consumer and the City of Miami Beach under these new rules and regulations are able to substantially maximize the proceeds, quality, and availability of cable television service to the residents of the City of Miami Beach; and WHEREAS, it is in the best interests of the City of Miami Beach to maximize cable revenue paid to the City of Miami Beach; and WHEREAS, the best interests of the City require that the City Manager be directed to proceed pursuant to his recommendations. NOW THEREFORE, BE IT RESOLVED that the City Manager and City Attorney are hereby directed as follows: 1 . To negotiate with Gold Coast Cablevision regarding implementation of new rules and regulations pursuant to the Cable Television Consumer Protection and Competition Act of 1992 with respect to customer service and rate regulation; to negotiate renewal and modifications of the Gold Coast franchise agreements to maximize the quality and availability of cable television service to the residents of Midmi Beach and maximize cable revenue paid to the City. 2 . To File a certification with the Federal Communications Commission for rate regulation authority and to propose specific rate regulation authority and to propose specific rate regulation procedures to the Commission for adoption. 3 . To retain Leibowitz & Spencer as special communications counsel on cable television service to the City of Miami Beach, pursuant to Attachment A of the Administration recommendations. 4 . To retain outside engineers to perform a technical review of the Gold Coast system at a cost not to exceed $5 , 000 . 00 . 5 . To conduct a financial audit of the Gold Coast Cablevision to deter_mize whether past franchise fees paid to the City appropriately reflect Gold Coast ' s obligations under the two cable franchise ag: eemonts. 6 . To consider the possibility of a municipal owned cable television system and to report back to the City with recommendations. PASSED AND ADOPTED this 8th day of April 1993 . ATTEST: / / ktei(zid /6' a ,Wg ,‘J CITY CLERK °^e/i&Ce7 u , p� FORM APPROVED LEG PT. 4#, By a-e-( 2."-`-' Date _t_12:4--3— • ATTACHMENT A LEIBOWITZ & SPENCER A PARTNERSHIP OF PROFESSIONAL CORPORATIONS MATTHEW L. LEIBOWITZ, P.A. SUITE 1450 SUITE 500 JOHN M. SPENCER, P.C. SUNBANK INTERNATIONAL CENTER 1000 CONNECTICUT AVENUE, N.W. JOSEPH A. BELISLE WASHINGTON, D.C. 20036 ONE SOUTHEAST THIRD AVENUE OF COUNSEL MIAMI, FLORIDA 33131-1715 SAN FORD L. BOHRER TELEPHONE(305)530-1322 NOT ADMITTED TO TELECOPIER(305)530-9417 FLORIDA BAR DRAFT March 31 1993 Laurence Feingold, Esq. City Attorney City of Miami Beach 1700 Convention Center Drive Miami Beach, FL 33139 Re: Special Counsel for Cable Television Dear Mr. Feingold: This letter is to set forth the Agreement of the City of Miami Beach to retain the Law Firm of Leibowitz & Spencer as Special Counsel for the purpose of representing the City in the area of cable television, including specifically the following areas: 1. Review the City' s present cable ordinance and cable franchise agreements, and make recommendations for appropriate modifications thereto. 2 . Advise the City with respect to its existing cable franchise relationship and assist the City in negotiating a renewal thereof, if appropriate. 3 . Advise the City regarding competitive cable franchises, including but not limited to, municipal owned cable systems. 4 . Advise the City regarding new federal cable statutes and implementing FCC rules and regulations, including but not limited to, rate regulation, customer service and cable technical standards. 5 . Represent the City before the FCC in cable television matters, including but not limited to, filing for rate regulation authority. 6. Advise the City regarding enforcement of existing and future cable services offered to the City and its residents. Laurence Feingold, Esq. March 31, 1993 Page Two Leibowitz & Spencer will also advise the City as to procedures, notices, public hearings, required approvals and filings, and other legal matters related to the provision of cable television service to the City. In addition thereto, Mr. Leibowitz will attend any City hearings related to cable television services and as needed, Mr. Leibowitz will agree to provide verbal reports to the City Commission. To avoid any non-productive time, the City will schedule Time Certain for any such appearances. It is understood and agreed that Leibowitz & Spencer currently charges hourly rates for attorney time from $185 to $250 and $60 for paralegal times. These rates are subject to revision from time to time. It is further understood that Matthew L. Leibowitz will be the attorney primarily responsible for the City' s work and that his current hourly rate is $250. However, in recognition that the City is a muncipality and is currently facing severe budgetary restrictions, Leibowitz & Spencer agrees to bill the City only seventy percent (70%) , on a current basis, for Mr. Leibowitz ' s services rendered covered by the scope of the work above. The balance of the fees will be due when the City authorizes either a renewal franchise with its existing franchisee or a new franchise with a new cable operator and the City receives payment of a renewal fee or an initial franchise fee or other payment by the cable operator, provided that the deferred payment shall be limited to the amount by which the renewal fee, initial franchise fee or other payment by the cable operator exceeds the expenses and non- deferred fees previously paid or payable to Leibowitz & Spencer under this agreement. Unfortunately it is not possible to establish a fee cap at this time. The FCC has not yet adopted its new cable rules and regulations. In addition, it is not possible to ascertain, at this time, a reasonable projection of time related to advising the City with respect to its existing relationship with its cable franchisee and negotiating a renewal thereof, if appropriate. Nor is it possible, at this time, to reasonably ascertain the City' s needs to investigate competitive cable franchises and/or municipal owned cable systems. However, in order to assure financial responsibility in the provision of services by Leibowitz & Spencer, Leibowitz & Spencer recognizes that by this Agreement the City authorizes work not to exceed $50, 000 in non-deferred fees. In the event this authorized amount is reached, the City and Leibowitz & Spencer will determine whether it is appropriate and/or necessary for the City to continue the services of Leibowitz & Spencer and if so, they will negotiate a new maximum authorized limit and/or if appropriate, a specific cap of fees for the remaining work to be completed so that Leibowitz & Spencer will be fairly and reasonably compensated for • Laurence Feingold, Esq. March 31, 1993 Page Three their services remaining to be rendered on behalf of the City. In addition to fees, Leibowitz & Spencer shall be entitled to payment of out-of-pocket expenses and reimbursements, including without limitation, long distance telephone calls, air express charges, printing, photocopying, facsimiles, hand delivery, travel, lodging, filing, and other out-of-pocket expenses. All fees and expenses will be billed monthly and payable within thirty days of billing. This Agreement may be cancelled at any time by either the City or Leibowitz & Spencer upon receipt of reasonable written notice. However, if the City elects to terminate this agreement prior to renewing its existing franchise or issuing a new franchise, the City will remain responsible for the payment of the full fees incurred to the date of termination, payable upon renewal of the current franchise or issuance of a new franchise and receipt by the City of a renewal fee or an initial franchise fee or other payment by the cable operator, provided that the deferred payment shall be limited to the amount by which the renewal fee, initial franchise fee or other payment by the cable operator exceeds the expenses and non-deferred fees previously paid or payable to Leibowitz & Spencer under this agreement. If the foregoing meets with your approval, please so indicate by signing this letter where indicated and returning an executed copy to our office for our records. We look forward to working with you and the other City officials on this very exciting project. Sincerely yours, Matthew L. Leibowitz The undersigned, being duly authorized, hereby accepts this engagement. By: Laurence Feingold, City Attorney City of Miami Beach Date: CITY OF MIAMI BEACH e_rf CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH FLORIDA 33139 OFFICE OF THE CITY MANAGER TELEPHONE: (305) 673-7010 FAX: (305) 673-7782 COMMISSION MEMORANDUM NO. 41)93 DATE: April 8 , 1993 TO: Mayor Seymour Gelber and Members of the City Commission FROM: Roger M. Carlton - City Manager Laurence Feingold, Esq. •�' City Attorney SUBJECT: RESOLUTION AUTHORIZING: 1) THE ADMINISTRATION TO NEGOTIATE WITH GOLD COAST CABLEVISION RENEWAL AND MODIFICATIONS OF ITS CABLE TELEVISION FRANCHISE AGREEMENTS; 2) TO AUTHORIZE THE ADMINISTRATION TO CERTIFY TO THE FEDERAL COMMUNICATIONS COMMISSION FOR CABLE RATE REGULATION AUTHORITY; 3) TO AUTHORIZE THE ADMINISTRATION TO RETAIN LEIBOWITZ & SPENCER AS OUTSIDE COUNSEL TO REPRESENT THE CITY IN CABLE TELEVISION MATTERS; 4) TO AUTHORIZE THE ADMINISTRATION TO HIRE AN OUTSIDE ENGINEERING FIRM FOR A TECHNICAL AUDIT OF THE GOLD COAST CABLE TELEVISION SYSTEM; 5) TO AUTHORIZE THE ADMINISTRATION TO CONDUCT A FINANCIAL AUDIT OF GOLD COAST CABLEVISION; AND 6) TO AUTHORIZE THE ADMINISTRATION TO CONSIDER THE POSSIBILITY OF MUNICIPAL OWNERSHIP OF CABLE TELEVISION AND TO REPORT BACK TO THE COMMISSION WITH A REPORT AND RECOMMENDATIONS. ADMINISTRATION RECOMMENDATION The Administration recommends that the City Commission adopt the attached Resolution which provides for the following: 1. To authorize the Administration to negotiate with Gold Coast Cablevision regarding implementation of new rules and regulations pursuant to the Cable Television Consumer Protection and Competition Act of 1992 with respect to customer service and rate regulation; to negotiate renewal and modifications of the Gold Coast franchise agreements to maximize the quality and availability of cable television service to the residents of Miami Beach and maximize cable revenue paid to the City. 2. To authorize the Administration to file a certification with the Federal Communications Commission for rate regulation authority and to propose specific rate regulation procedures to the Commission for adoption. 3 . To authorize the Administration to retain Leibowitz & Spencer as special communications counsel on cable television service to the City of Miami Beach, pursuant to Attachment A hereto. 136 AGENDA ITEM DATE _g_ 93 • 4 . To authorize the Administration to retain outside engineers to perform a technical review of the Gold Coast system at a cost not to exceed $5, 000. 5. To authorize the Administration to conduct a financial audit of the Gold Coast Cablevision to determine whether past franchise fees paid to the City appropriately reflect Gold Coast's obligations under the two cable franchise agreements. 6. To authorize the Administration to consider the possibility of a municipal owned cable television systems and to report back to the City with recommendations. BACKGROUND EXISTING RELATIONSHIP: The City of Miami Beach has awarded to CATV franchises. The first franchise was awarded to UltraCom of Dade County, Inc. in 1979. This franchise was for a fifteen year period. A second fifteen year franchise was awarded to All-Rite Satellite, Inc. , in 1986. In March, 1988, both Miami Beach franchisees were transfered to Rifkin/Narrangansett South Florida CATV Limited Partnership d/b/a Gold Coast Cable. Since that date, Gold Coast has been providing CATV service to Miami Beach under both franchises. The Ultracom franchise is up for renewal in 1994 and, thus the City is the renewal process. In contrast, the All-Rite franchise is not up for renewal until the year 2001. In Dade County, cable operators also receive a franchise from the County. In 1992, Dade County amended the Metropolitan Dade County Code relating to cable television and in doing so, not only updated its general franchise ordinance, but also increased its share of the gross revenue paid to the County to 3%.' On September 15, 1992, Dade County renewed the Rifkin/Narragansett cable franchise for a ten year period beginning May 16, 1993 and ending May 16, 2003 . The terms and conditions of the renewal license comply with the update code of Metropolitan Dade County including the increased franchise fee. As a result, the City will lose 1% of the gross revenue to Dade County starting on May 15, 1993 under the Ultracom franchise. FRANCHISE FEE ANALYSIS: Under the Ultracom franchise, the franchisee was required to pay 3% of a very narrowly defined gross revenue which specifically excluded auxiliary services and add revenue. In contrast, the All- Rite franchise required a 4% fee and defined gross revenue significantly more liberally. The amended County Ordinance may allow for the City to avoid the loss of the 1% fee. 'Under federal law the maximum franchise fee is 5%. 2 1.37 PAST DUE FRANCHISE FEES: In March, 1988 when the City granted to Gold Coast the transfer of both franchises, Gold Coast accepted the obligations of two (2) fee payments to the City. It is our understanding that subsequent to the transfer, Gold Coast merged all assets, including subscribers, from both franchised operations into one. However, it is unclear on what basis Gold Coast has been making its franchise payments since 1988 - under a 3% calculation of the narrowly defined gross revenue or 4% of the more liberal definition ofg ross revenue, or a hybrid, recognizing the continued existence of both franchises. Clearly one must assume that, to the extent Gold Coast may have segregated it customers, Gold Coast made every effort to convert any All-Rite subscribers to a higher paying Ultracom subscribers, thus increasing its revenue, while correspondingly, lowering its payment to the City.2 Accordingly, it would be appropriate to seek past due franchise fee payments from Gold Coast from March 1988 to the present, based on a percentage allocation of subscriber as of the date of transfer, in addition to late fees and interest.' MODIFICATION OF : Both the Ultracom franchise and the All-Rite franchise are seriously flawed and outdated. Since the time those franchises were issued, cable television law has evolved substantially, including but not limited to, the adoption by Congress in 1992 of the Cable Television Consumer Protection and Competition Act of 1992. As a result thereof, the City should seek numerous significant modifications in the franchise agreements with Gold Coast. Modifications would result in potentially increased revenue to the City, as well as, increased cable services to the City including dedicated channels for the City's use and programming of the City's governmental activities. In addition thereto, the City should modify the terms of the agreement to allow for the new rate regulations to protect residents of the City as well as customer service standards and new technical standards. This segregation ation and conversion of customers is supported by data published by the Dade � County Office of Cable Television Coordination. Gold Coast reported All-Rite subscribers under the classification of"TV Ticket". In 1991,Gold Coast reported 35,256 subscribers while TV Ticket reported only 3,194 subscribers. In 1992,Gold Coast reported 39,022 subscribers while TV Ticket reported only 1,715 subscribers. 'Section 21 of the All-Rite Franchise is entitled"Payment of Fee and Penalties",but fails to set forth any penalties. This section allows he City to audit the Company's books, at City expense,for a three year period. Any additional amount owed to the City is required to be paid within thirty(30) days. 3 ].3 RETAINING OUTSIDE COUNSEL: The law surrounding cable television has changed dramatically since the City issued the Ultracom and All-Rite franchises. There has been significant legislation on both the federal and state level, numerous court cases, and adoption of new FCC rules and regulations governing cable television service. In addition thereto, cities around the country have taken advantage of these new laws and rules and regulations to maximize both cable service and revenue to the City. In light of this complex area of law, we would recommend the retention of the Law Firm of Leibowitz & Spencer to represent the City in these matters. As the Commission will note, Leibowitz & Spencer has previously performed legal services in the area of cable communications for this City by filing comments in recent FCC rule makings. The Administration found that Leibowitz & Spencer provided the highest quality legal services on behalf of the City. It is likely although not guaranteed, that as a result of the negotiations with Gold Coast, that the cost to the City for retaining Leibowitz & Spencer can be in whole or at least in part reimbursed by the cable operator. Furthermore, as the Commission will note, in the Attachment A hereto which is the proposed agreement between the City and Leibowitz & Spencer, Leibowitz & Spencer has agreed to provide a discount on its current hourly billing with the remainder not due until the franchise is renegotiated and payment is received by the cable company. Finally, the Commission will note that this Agreement for legal services does not contain a cap. Unfortunately at this time, given the dynamic circumstances surrounding cable television including the fact that the FCC rules and regulations have not even been issued to date, the Administration believes that a cap is not feasible. However, Leibowitz & Spencer and the Administration have agreed to a maximum authorized dollar amount to be spent in this area. In the event that additional work will be required, the Administration after appropriate negotiations with Leibowitz & Spencer will come back to the Commission for additional authorization. ENGINEERING AUDIT: Upon recommendation by Leibowitz & Spencer, prior to completing the negotiations for renewal or modification of the cable franchise agreements, we believe it is appropriate to audit the technical plant of Gold Coast Cablevision. In part, this is also recommended since the City has received a significant number of complaints regarding the technical service provided by Gold Coast. Leibowitz & Spencer has recommended several cable engineering consultants and the Administration seeks authority to retain the most qualified engineer on a cost not to exceed $5,000 for such audit. The audit would ultimately provide the Administration and the City with not only a technical status of the present system, but recommendations for future technical modifications to the system to insure that the City receives state-of-the-art cable television service. 4 1.39 • MUNICIPAL OWNERSHIP: Both the City's cable franchises are non-exclusive. Over sixty cities provide cable television service through a municipally owned system. Such ownership may be beneficial to the City by providing better cable television service to the residents, while also increasing the revenue to the City. However, there are many unknown factors, such as actual performance of these existing municipal systems and funding requirements. Therefore, the Administration desires to gather information on municipal ownership and make a report to the Commission on its findings with appropriate recommendations. • 5 • • ZOO - -- 1iai.v i1L2L RESOLUTION NO. 93-20774 Authorizing 1) the Administration to negotiate with Gold Coast Cablevision renewal and modifications of its cable television franchise agreements; • 4414.111011111